Capital deprivation and startup strategies

from Trakin' the india business buzz by Arun Prabhudesai

One of the most important uses of capital is in discovering new markets. With a sufficient pool of capital, new markets can be quickly discovered, probed and exploited; the viable markets invite a rash of competing companies, and unviable markets are neglected and wither.

In India, most companies are severely capital-deprived. With the increases in FDI in recent years, this has changed for the better, but the process of market discovery is still slow and, by and large, left to large companies.

This capital deprivation is one of the reasons that a few large companies are spread across many unrelated markets in India – for example, the Tatas in broadband (Tata Indicom), mobile (Tata Docomo), power distribution (Tata Power in Mumbai), and even electronics retail (Croma).

One of the best features of the American economy is that capital is available to both small and large companies – small companies often doing the work of finding new profitable market niches, and going on to become (or selling out to) larger companies.

In India though, the lack of capital means that most small companies have to think constantly of ways to survive before it becomes possible to sustain the company through cash flows from their primary product.

Some markets require large amounts of capital before it can be said with any certainly whether they are viable or not. In the book "Founders at Work", the founder of Tivo – probably one of the more disruptive products of the last few decades – mentions that it took about $500 million in funding in its first few years. This is an unimaginable amount of money for a small company (or even a medium-sized) company in India to spend, although in the case of Tivo at least, I think the jury is still out on whether this is a viable market or not.

The example of Amazon – which spent several years taking investor money before it turned profitable – is also well known.

These examples – of large capital expenditures before a market is proven – are unlikely to repeat themselves in India since the pool of capital is limited, and flows mainly to large companies. Large companies are typically conservative about exploring unproven markets, since there are multiple internal constituencies that have to be convinced before such projects are green-lighted.

Given this situation of capital scarcity, especially for early stage companies, what is the best strategy for startups to survive?

One is, as mentioned above, to copy products that have worked somewhere else. These have the nice property that you know that someone, somewhere, is willing to pay for that product, and it is also fairly clear how much money is needed to produce it. Companies following this strategy have to be careful that the original product itself won’t be available in their target market before they are ready. For example, making an Indian version of Facebook at this point is probably a poor bet, since the original product has considerable traction. Countries such as China or Germany that have language barriers have seen domestic knockoffs of popular international Web applications before those products were localized into their domestic languages.

Another strategy is to bootstrap the company by doing work for hire. This is a well-established path, and intermediaries like Elance, Rent a Coder and oDesk make it possible to get contract work that (at least in theory) can pay for the salaries of the people working on the "real" product.

In practice, I believe it is all too easy to become a full fledged outsourcing company, and lose sight of the original product. This is fine as far as it goes, but a service company lacks the advantages of leverage that a product startup naturally has. (See my previous post for more on this.)

An additional option, which I believe more and more companies in India will adopt, is to conceive and develop a product in India for the international market.

While examples of US companies that develop their entire product in India while targeting the US market are now commonplace, these companies are typically American companies with American (or Indian-American) founders.

Companies created by Indians in India have traditionally focused on the market at their doorstep before venturing abroad. In some cases, especially for technology products, the Indian market may take several years to become large enough to support Indian startups. In such cases, it makes sense to target global markets side by side with, or sometimes even before, the Indian market.

This "global from day 1" attitude is probably most evident in companies from Israel, as well as other small European countries that lack a large home market. For products where the Indian market is more similar in size to, say, Belgium, than the US, it may make a lot of sense for Indian companies to think international from the start.

[This post is authored by Abhijeet Vijayakar - founder of Nunook Interactive Pvt Ltd, a game startup in Mumbai and Chennai. Nunook is currently developing BrainNook, India's first online, educational virtual world for kids, parents and teachers. In a previous life, Abhijeet developed 3D graphics engines (and games) at Electronic Arts in the San Francisco Bay Area. He highly recommends not succumbing to capital deprivation syndrome.]

Why hiring is paradoxically harder in a downturn

From http://blog.summation.net/

Noise goes up but the quality stays the same

Hiring is always hard.  The hardest thing to do at a company is the recruiting and hiring.  It was really hard when the economy was doing well.  Paradoxically, for certain industries (especially those reliant on innovation such as those in the tech space), it's even harder when times are tough.

That's right ... hiring in tough economic times can actually be much harder than when times are good.   In a downturn, the amount of resumes from C-Players massively increases while the amount of resumes from A-Players probably remains the same. 

Never settle

First, let's assume you've already bought into the "When Good Isn’t Good Enough" philosophy of always trying to hire A-players because they are just so much more productive than B-players (an 'A-Player' by definition is incredibly productive and smart and  has that 'it', that rockstar-esque factor that makes everyone want to work with her).  That means you won’t settle for people who are good but instead hold out for people that are great.

Great people – the A-Players – are a very different breed from the good (B-Players) and mediocre (C-Players).  Great people are more likely to be employed with a company since a great person is often over 3 times as productive as a good person.  Joel Spolsky argues in Smart & Gets Things Done that an A-player is anywhere from 5-10 times as productive. Joel looked at coursework data from a Yale computer science class and found that the fastest students finished their workload as much as ten times faster than the slowest students (average was 3-4 times faster).

Getting serious about your meeting problem

by Seth Godin

Do you have one? Some folks are going to eight hours of meeting a day. At Ford, they used to have meetings to prepare for meetings, just to be sure everyone had their story straight.

If you're serious about solving your meeting problem, getting things done and saving time, try this for one week. If it doesn't work, I'll be happy to give you a full refund.

1. Understand that all problems are not the same. So why are your meetings? Does every issue deserve an hour? Why is there a default length?
2. Schedule meetings in increments of five minutes. Require that the meeting organizer have a truly great reason to need more than four increments of realtime face time.
3. Require preparation. Give people things to read or do before the meeting, and if they don't, kick them out.
4. Remove all the chairs from the conference room. I'm serious.
5. If someone is more than two minutes later than the last person to the meeting, they have to pay a fine of $10 to the coffee fund.
6. Bring an egg timer to the meeting. When it goes off, you're done. Not your fault, it's the timer's.
7. The organizer of the meeting is required to send a short email summary, with action items, to every attendee within ten minutes of the end of the meeting.
8. Create a public space (either a big piece of poster board or a simple online page) that allows attendees to rate meetings and their organizers on a scale of 1 to 5 in terms of usefulness. Just a simple box where everyone can write a number. Watch what happens.
9. If you're not adding value to a meeting, leave. You can always read the summary later.

This is all marketing. It's a show, one that lets your team know you're treating meetings differently now.

Three kinds of meetings

by Seth Godin

Meetings are marketing in real time with real people. (A conference is not a meeting. A conference is a chance for a circle of people to interact).

There are only three kinds of classic meetings:

1. Information. This is a meeting where attendees are informed about what is happening (with or without their blessing). While there may be a facade of conversation, it's primarily designed to inform.
2. Discussion. This is a meeting where the leader actually wants feedback or direction or connections. You can use this meeting to come up with an action plan, or develop a new idea, for example.
3. Permission. This is a meeting where the other side is supposed to say yes but has the power to say no.

PLEASE don't confuse them. Confused meeting types are the number one source of meeting ennui. One source of confusion is that a meeting starts as one sort of meeting and then magically morphs into another kind. The reason this is frightening is that one side or the other might not realize that's actually occurring. If it does, stop and say, "Thanks for the discussion. Let me state what we've just agreed on and then we can go ahead and approve it, okay?"

While I'm at it, let me remind you that there are two kinds of questions.

1. Questions designed to honestly elicit more information.
2. Questions designed to demonstrate how much you know or your position on an issue and to put the answerer on the defensive.

There's room for both types of questions, particularly in a team preparing for a presentation or a pitch. Again, don't confuse them. I like to be sure that there's time for the first type, then, once everyone acknowledges that they know what's on the table, open it up for the second, more debate-oriented type of question.

When should a startup pull the plug?

from Trakin' the india business buzz by Sriram Vadlamani

Started in 1981 Infosys was on the verge of collapse after 8 years when a joint venture with Kurt Salmon Associates (KSA) has collapsed. The Infosys-KSA joint venture was Infosys’s attempt to break into American market. If Mr. Murthy has accepted that as a failure and moved on, there wouldn’t be any Infosys. Murthy along with his co-founders decided to stay on. The rest is history which everyone is part of.

The story of Infosys is an inspirational one. But, the times have changed since then. The gestation period for a startup has come down drastically. 8 years is not a long time then, but anything more than 3 years is a long time now.

A startup which is 3 years old and doesn’t have a profits or break-even will go down unless its Twitter.

Pulling the plug though looks and sounds fashionable, is really difficult to do. There is a lot of emotional attachment. But, sound logic should overcome that attachment and say these three words - This is it. If you fail, it is not the first time someone has failed. If your startup fails, again this is not the first time a startup has failed. Besides, there is no such thing as a failure until you stop learning from these things. There are always learning’s.

The startups mentioned here have done just that. They have pulled the plug on a specific idea but not on the entrepreneurial spirit.Tripmela.com an online travel deal aggregator went was sold on ebay fro 112,000.

Reason is the aggregator is not cut for Indian markets as there weren’t many hotels offering deals.Rohit Agarwal’s Tech Tribe a networking startup which received VC funding shut shop after 3 years of operations. Reason again is the changing business conditions and bigger players with more capital at their disposal. Rohit moved onto to online education space.

Kesava Reddy’s MyDuniya offers  email-via-SMS service. The concentration on individual users instead of corporates did not work very well and instead found a new start-up called Numo Solutions. It offers customized SMS solutions for corporate’s.Bookeazy.com a movie ticketing service was doing good but the founders pulled the plug on it as it is taking too much of their time. They came up with Lipikaar a translation and transliteration product.

In all these startups there is a trend :

1. You pull the plug, Accept failure and go into oblivion or a day job.
2. You pull the plug on this idea, go on to a different idea and succeed. It is statistically proven that entrepreneurs get second time lucky.
3. You start something up, you start something else along with it, work on them in parallel and then you decide to pull the plug on one of the things which isn’t working.

The first option does not seem likely as I believe in this saying - Once an entrepreneur always an entrepreneur.

I still have some questions left. What if a startup stays on the course to become the next Infosys? Should a startup have a  contingency plan or an exit strategy?  When do you think startups should pull the plug?

The Loaded Carriage Analogy

from Personal Growth Map by Haider

One of the main reasons why we don’t make the progress we can make in life is that we expect to acquire all the knowledge and skills possible in any endeavour before we make a move.

Rather than start a business, or a business venture, we want to learn everything there is to learn about the economy, finance, business, marketing, advertising, etc, etc.

etc.

Before we make any changes to what we eat, in order to improve our health, we feel the need to read up on nutrition, proper exercise, supplements, etc.

We want to know how to write the best articles possible before publishing anything that can be seen by a set of eyes other than our own. After all, we don’t want to expose our weaknesses or make any mistakes, and in order to be successful, we need to be known for being the best.

At least, that’s what we say to ourselves.

This approach is like going on a journey and trying to load everything we can possibly need or might find a use for onto our carriage before making a move. We go to great lengths to find the resources we need before we venture out, and continue to pile our belongings for fear that we might leave unprepared.

After finally deciding that we are ready enough to make a move we realize that the carriage is too heavy to pull!

We end up staying where we started, without making any progress and without making any use of the resources we amassed.

If you’ve been collecting books to read about business before getting your feet wet in a business, or trying to perfect a skill - such as writing - before putting it to practical use, then you need to bear this analogy in mind.

Having a loaded carriage isn’t a virtue. It’s what’s holding you back.

You might make much more progress with a backpack than with all the resources you will find on that burdened carriage.

Loading Up a Moving Carriage

Rather than collecting resources before making a move, you can load your carriage along the way.

This helps you determine exactly what you need (and not to burden yourself with heavy resources for hypothetical needs), you will be making progress as soon as possible (and with the little resources you might have now), it exposes you to opportunities you wouldn’t have been exposed to had you remained where you started and you would have developed momentum that allows you to make progress without much effort.

The sole need for the resources we collect is using them for the journey. Therefore, it’s important to focus on the journey and not the resources.

By loading a moving carriage, you will develop the appropriate focus and make the appropriate use of your resources!

Story of non focus

The rise and fall of Subhiksha

from Trakin' the india business buzz by Sriram Vadlamani

It is only a week since I blogged about Indian retail in for a heady mix. Now, we have the case of Subhiksha which is battling for survival. Subhiksha which was started with 1 store in 1999 has grown to more than 1000 stores by the end of 2007.

Its founder R Subramaniam is a IIT Chennai and IIM Ahmedabad alumnus. That the best combination of pedigree from India there can every be.Subhiksha has ICICI Ventures and Wipro’s Aziz Premji as its investors.

Everything seems to be in the right place. What could possible go wrong?

There are several things which went wrong in Subhiksha’s case but 2 points are staring at me:

1. Expansion against consolidation : With the availability of free capital and the irrational exuberance of the markets, people tried anything and everything to just expand without actually looking back at what they have become.
2. Lack of Focus : This to me is the biggest thing every other company in India faces. Once they see profits they quickly put on their Ambani/Tata hat and try to become a conglomerate. It is just not one company they will run but they will create offshoots, Strategic Business Units, what have you and do all kinds of stuff. In the end they forget what they really want. Satyam is the best example for my case againstconglomerization. That is the reason why I like Infosys for their extreme focus. In Subhiksha’s case though, it is not conglomerization but the lack of focus on the product mix they are offering.

I know retail is a different thing which might be confusing for anyone to focus on. But, before opening the 500the store shouldn’t they be checking whether people are buying medicines from them or going to the medical shop round the corner. Before opening the 1000th store shouldn’t they be checking whether people are buying a mobile from them or from a specialized mobile store.

On both occasions they answer is yes. I would rather go to a store which has a specialization for the thing I want to buy. I just don’t want to waste my time in a shop which offers me everything and anything only to find that they don’t offer a thing (which I want).

That to me is the bigger issue ailing Indian retail not just Subhiksha. Subhiksha happens to be a case study for the future and current retailers.

Enjoy this great presentation by Manas Ganguly

The Anatomy Of A BustPopout

View more presentations from Manas Ganguly.

Presentation dugg via pluggd.in

PS : I just coined a new word : conglomerization. This is a bug, the whole India Inc is suffering with. This is where I want to recommend everybody a book called Small Giants by Bo Burlingham. If you have to choose between being big and being remarkable - choose remarkable. If you look at any Indian company it is bound to have a subsidiary in a totally different vertical.

A Startup Never Closes

from Wil Schroter's BIGGER Blog - Go BIG Network

When it comes to a startup, the luxuries shared with established companies are few and far between. Chief among them is the luxury to close at the end of the day. Big companies have the benefits of capital, customers and receivables.  Startups, on the other hand, have jack squat.  They need to work twice as hard to make half as much, and even then they’re not working nearly enough.  

If you had any delusions going into this new venture that things were going to be easy and you were going to be on your own schedule then let me serve as your wake-up call.  A startup runs like a casino – it’s all about making money, it’s a huge gamble, and no matter what, a startup never closes!

Your new business hours: every waking moment

Working like a slave is the norm in a startup company, not the exception.  When I started my first company, Blue Diesel, I didn't see my family, celebrate Christmas, or take a weekend day off for three years.  After a while I forgot that people go home on the weekends and sick days shouldn’t be considered a vacation.  Sure, I was demented, but I wasn’t alone.    

Startups realize that in order to get ahead they need to trade their time (and their lives) for the good of the company.  You can only accomplish so much by working smart – the rest just comes down to lots and lots of hours. 

Even if you’ve go the stamina to put this kind of time in, it doesn’t necessarily mean the rest of your team does.  Make sure that everyone is well aware of what is expected of them and what they’re signing up for.

Set Clear Expectations, And Live by Them

It's always helpful to let people know what they are getting into before they get started. Inform potential employees during the interview that the demands of a startup are far and beyond anything of a regular 9–to-5 job.  Let them know that you don't think twice about working weekends or into the evening and that you expect the same of them.  You'll find that the clock-punchers won’t return your phone calls and the truly insane will show up on Monday with a case of Red Bull.  It’s a twisted form of “natural selection”.

And remember, the pace of a startup starts with you, so it's important that you set a tone by consistent example.  Don't expect your team to show up before you and leave after you.  You need to demonstrate that if sacrifices are going to be made, that you are as willing to make them as anyone. Action speaks a whole lot louder than words.

How to know you're working for a startup

Let me give you some indicators to let you know when you're truly working for a startup.  I'll give these to you Jeff Foxworthy style.  If you really don't know what day it is, you're probably working for a startup.  If you know the number for pizza delivery to your office by heart, you're probably working for a startup.  If you look forward to holidays because you'll miss traffic and get to work ten minutes sooner, you're probably working for a startup.  Welcome to your new life.

Send 5:01 home

Not everyone will be on board with this “every waking hour” schedule.  In fact, you'll inevitably hire the guy who will quickly become known as "5:01".  We call him 5:01 because when the clock strikes 5:01, his stuff is already packed up and he’s heading out the door. This is a problem because startups don't close at 5:00 - they leave when the job is done.  

When the rest of the team is working around the clock and forgoing all sleep, 5:01 is going to be about as popular as cancer. This isn't to say that 5:01 isn't a good guy who can do good work.  There's plenty of room for him - just not in a startup.

The Star that Burns Brightest Burns Fastest

There’s a real downside to this schedule and that’s burnout.  You can only run the engine at red line for so long – eventually it’s going to explode.  Knowing this, you need to give you and your team a well-deserved break from time to time.  When your performance slows down all the extra hours in the world won’t make up for it.  Don’t be afraid to take a pit stop from time to time and refresh.  Get as far away from work as possible and just unwind.

It better be worth it

Needless to say, if you are going to make a sacrifice this great, you had better feel extremely passionately about what you are doing.  In the end, when you make your dream a reality, the payoff will be worth it.  Until then, put this column down, chug another Mountain Dew, and get back to work!

Cost cutting : Different companies different methods

from Trakin' the india business buzz by Sriram Vadlamani

When it comes to cost cutting, the immediate measure any organization resort to is firing. Indian companies are not that fortunate. Part of it is culture and part of it is the Indian labor laws. Companies have to come up with innovative ways to achieve what appears to be a simple thing for our western counterparts.

Infosys for example has urged its employees to save $10 per person. It has also offered a very popularsabbatical option too. If rumors are to be believed, many employers have cut down on the cabs, coffee and even toilet paper. Satyam was rumored to be sending employees packing for fudged bills. Which by now is very ironic as they have the biggest fudged bill ever - the letter from Raju.

Few employers aren’t that innovative. Jet Airways has to face the wrath of the employees and the government when it decided to fire people. It revoked its decision and took the employees back. 

Uncertain times require uncertain and innovative measures to cut costs. Here is the latest from the cost cutting innovations of India Inc :

Mastek has offered 425 employees two options. Leave the company or get trained in a new skill for a nominal pay. The 425 employees are in excess of bench strength. Mastek thinks 80% of the employees will stay around. This is the politically correct version of the so-called non-performance.

Hindustan Unilever is resorting to the old management paradigm of performance related pay. It has increased the variable pay component and linked it directly to the performance of the employee. This to me is less cruel and more like a performance-boosting move. It saves the cost to the company as the fixed costs are moved to the variable component.

Tata Group is more direct in its cost cutting. Its top executives will receive 10-15% less salary. This move includes all the companies including Tata Consultancy Services (TCS) and Tata Motors, which did not meet the market expectations.

What is your favorite cost cutting story?

*Image credit.

Possibly related posts:

• Indian Business Trends: Then and Now !
• Patni pays rightful wages to its Employees after 3 years - nearly .4 Million !
• India’s new-found confidence: Global Acquisitions !

What is school for?

from Seth's Blog by Seth Godin

Seems like a simple question, but given how much time and money we spend on it, it has a wide range of answers, many unexplored, some contradictory. I have a thoughts about education, how we use it to market ourselves and compete, and I realized that without a common place to start, it's hard to figure out what to do.

So, a starter list. The purpose of school is to:

1. Become an informed citizen
2. Be able to read for pleasure
3. Be trained in the rudimentary skills necessary for employment
4. Do well on standardized tests
5. Homogenize society, at least a bit
6. Pasteurize out the dangerous ideas
7. Give kids something to do while parents work
8. Teach future citizens how to conform
9. Teach future consumers how to desire
10.  Build a social fabric
11. Create leaders who help us compete on a world stage
12. Generate future scientists who will advance medicine and technology
13. Learn for the sake of learning
14. Help people become interesting and productive
15. Defang the proletariat
16. Establish a floor below which a typical person is unlikely to fall
17. Find and celebrate prodigies, geniuses and the gifted
18. Make sure kids learn to exercise, eat right and avoid common health problems
19. Teach future citizens to obey authority
20. Teach future employees to do the same
21. Increase appreciation for art and culture
22. Teach creativity and problem solving
23. Minimize public spelling mistakes
24. Increase emotional intelligence
25. Decrease crime by teaching civics and ethics
26. Increase understanding of a life well lived
27. Make sure the sports teams have enough players

 If you have the email address of the school board or principals, perhaps you'll forward this list to them (and I hope you are in communication with them regardless, since it's a big chunk of your future and your taxes!). Should make an interesting starting point for a discussion.

The Art of Laying People Off

The Art of Laying People Off

GUY KAWASAKI OF HOW TO CHANGE THE WORLD | NOVEMBER 18TH, 2008 - 11:47 PM 
(131) FOUND THIS USEFUL. DO YOU? 

I hope that you never have to lay off or fire people, but the reality is that you will as you advance in your career. If you are scoffing (“Guy, you are clueless: We’ll never downsize, because we’re growing so fast, and I’ll never make a bad hire”), then you’re my intended reader.

1. Take responsibility. Ultimately, it is the CEO’s decision to make the cuts, so don’t blame it on the board of directors, market conditions, competition, or whatever else. In effect, she should simply say, “I made the decision. This is what we’re going to do.” If you don’t have the courage to do this, don’t be a CEO. Now, more than ever, the company will need a leader, and leaders accept responsibility.
2. Cut deep and cut once. Management usually believes that things will get better soon, so it cuts the smallest number of people in anticipation of a miracle. Most of the time, the miracle doesn’t materialize, and the company ends up making multiple cuts. Given the choice, you should cut too deeply and risk the high-quality problem of having to rehire. Multiple cuts are terrible for the morale of the employees who have not been laid off.
3. Move fast. One hour after your management team discusses the need to lay off employees, the entire company will know that something is happening. Once people “know” a layoff is coming, productivity drops like a rock. You’re either laying people off or you’re not—you should avoid the state of “considering” a layoff.
4. Clean house. A layoff is an opportunity to terminate marginal employees without having to differentiate between poor performers and positions that you’re eliminating. It’s good for the marginal employee because he’s not tainted with getting fired. Finally, it’s good for the employees who remain because they will see that you know who’s performing and who isn’t.
5. Whack Teddy. Most executives have hired a friend, a friend of a friend, or a relative as a favor. When a layoff happens, employees will be looking to see what happens to Teddy. “Did he survive the cut or did he go? Is it cronyism or competence that counts at the company?” Make sure that Ted is dead.
6. Share the pain. When people around you are losing their jobs, you can share the pain, too. Cut your pay. In fact, the higher the employee, the bigger the percentage of pay reduction. Take a smaller office. Turn in the company car. Reassign your personal assistant to a revenue-generating position. Fly coach. Stay in motels. Sell the boxseat tickets to the ball game. Give your 30-inch flat-panel display to a programmer who could use it to debug faster. Do something, however symbolic.
7. Show consistency. I cannot understand how companies can claim that they have to cut costs and then provide severance packages of six months to a year of salary. You would think that if they wanted to conserve cash, they’d give tiny severance packages. Typically, there are three lines of reasoning for generous severance packages:
   1. Cutting head count, even with severance packages, is cheaper than keeping the employee around indefinitely, and we don’t want any lawsuits.
   2. We have lots of cash, so our balance sheet is strong, but we need to cut heads to make our profit-and-loss statement look better.
   3. Wall Street (or your investors) is expecting dramatic actions, so we need to do this to show the analysts that we’ve got what it takes to be a leader.

   None of these reasons makes sense. If you need to do a layoff to cut costs (and conserve cash), then provide minimal severance packages, cut costs as much as you can, conserve as much cash as you can, and deal with your guilt in other ways. If nothing else, it’s a consistent story.

8. Don’t ask for pity. Sometimes managers go to great lengths to show the person they’re laying off (or firing) how hard it is on them. Th is reminds me of the old definition of chutzpah: A boy murders his parents and then asks the court for leniency because he’s an orphan. The person who suffers is the one being terminated, not the manager.
9. Provide support. Usually, the people getting laid off aren’t at fault. More likely, it was the fault of top management—the same top management with golden parachutes. Hence, you have a moral obligation to provide services like job counseling, résumé-writing assistance, and job-search help. There are firms that specialize in helping employees during “transitions,” so use them.
10. Don’t let people self-select. We had a joke at Apple during the dark days of the late eighties that went like this: We would announce that employees who want to quit should come to a big meeting. Those who want to stay at the company should not attend. Then we would let the people go who didn’t attend the meeting and keep the ones who wanted to quit—because the latter were smart enough to know that we were in bad shape or that they had better opportunities elsewhere.

    The point is that if you let people choose to get laid off or retire, you might lose your best people. Deciding whom to lay off is a proactive decision: Select the go-forward team to ensure that you never have to lay people off again. Do not leave this to chance.

11. Show people the door. With few exceptions, all you should do is let people finish the day, maybe the week. (My theory is that Friday is the best day to do a layoff because it lets people have a weekend to decompress.) Showing people the door seems inhumane, but it’s better for both the people leaving and the people remaining.
12. Move forward. Let people say good-bye and then get going. This is when leadership counts. In bad times, you separate the men from the boys and the women from the girls. After the layoff, this is what the remaining employees will be wondering about:
    1. Guilt: “Why did I survive the cut and my colleagues didn’t?”
    2. Future of my job: “Will I survive the next round if there are more cuts?”
    3. Future of the company: “Will the company survive at all?”

    So you set—or reemphasize—goals, explain what everyone needs to do to get there, and get going, because the best way to move beyond a layoff is to get back to work.

Immediately after a layoff, you might want to retreat to your office, turn off the phones, stop answering e-mails, and avoid everyone. These are the worst actions to take. This is the time for you to motivate by walking around. Employees need to see you, talk to you, and get your help and advice. They don’t want to think their leader is cowering in some foxhole. The brave face that you put on may be a charade, but it’s an important charade.

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Reprinted by permission from Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition.  In other words, I asked myself if it was okay. If you liked this chapter, there are ninety-three more where this came from.

10 Steps to Take Action and Eliminate Bureaucracy

“I have been impressed with the urgency of doing. Knowing is not enough; we must apply. Being willing is not enough; we must do.” - Leonardo da Vinci

Article by Leo Babauta. (Follow me on Twitter.)

I’ve worked in a few offices where the paperwork, endless meetings, and other bureaucracy was ridiculous — so much so that the actual productive work being done was sometimes outweighed by the bureaucratic steps that needed to be taken each day.

When the focus is on action instead of bureaucracy, things get done.

I’ve worked for both private businesses and government agencies, and let me tell you, both require too much paperwork, too many steps to get things done, too much reporting, too many meetings, too much planning and too much training. Each of these things is usually management’s answer to a problem, but they add more problems, including a tendency to slow things down and get less done.

A better answer than adding extra steps and meetings to a workday is to focus on action. Create a culture of action and hire people who get things done. Eliminate as much bureaucracy as possible and get things moving.

Today we’ll look at some good ways to do that, based on my experience both as a worker and a manager. Believe me, I know the tendency to throw training and meetings and reporting and planning at a problem, but I also know how frustrating that can be for an employee who just wants to get the work done as effectively as possible. Why am I sitting in on another meeting when I could be getting work done? Why am I filling out more paperwork instead of actually doing the work?

Here are some ideas to get to the action and cut out the bureaucracy:

1. Know what you want to get done. Often bureaucracy happens when people focus on processes and forget about what the end result should be. Where are you trying to go? Find the shortest route to get there, rather than making things complicated. Visualize your desired result, and keep the focus on that.

2. Know your priorities. Keep in mind the most important work your company or organization does. It almost certainly isn’t paperwork or meetings (with a few exceptions, possibly). Of course, if you’re going to have a meeting with a potential client in order to sign him up, that’s probably a priority. But for many employees, the real work will be something else: writing code, writing articles, designing, making calls, crunching numbers, etc. Know the important work, and focus on that.

3. Eliminate paperwork whenever possible. How many forms does your company have? Much of that uses the same information. Can a simple computer program or online form be used instead, so people don’t have to fill out paperwork but can just fill in an online form where the basic information is stored and re-used so it doesn’t have to be re-entered? Often using a computer program (online or off) will also automate things so paperwork isn’t needed. Or just eliminate the paperwork altogether if it’s possible — sometimes it’s just better to take action without having to fill in things.

4. Cut out processes. Are there steps and approvals and work that people have to do that can be eliminated altogether? Keep an eye out for these processes and eliminate when possible. Every time someone is doing something routine, ask whether it’s really necessary, or if can be reduced or eliminated. Can several steps be cut out to make things quicker? Often the answer is a resounding “yes”.

5. Empower people. Often a manager becomes a bottleneck, requiring his approval before anything can get done. Worse yet is when approval is needed several times along the way, meaning it has to be bounced back and forth a bunch of times. Better: give people clear instructions about how to handle things and when approval is authorized, and allow them to handle it. Monitor things closely at first to ensure that they know how to follow the instructions, then give them more room to work independently and just report to you every now and then. Make sure the instruction include the circumstances when they need to alert you to any major problems.

6. Don’t put off decisions. Worse than a manager becoming a bottleneck is a bottleneck where decisions are delayed and things pile up. When a decision is required, try to make it quickly. Make sure you have all necessary info, know what criteria you’re using to make the decision, and then make the decision immediately. The longer you wait the worse the problems become. Indecision is the enemy of action.

7. Have the information you need ready. If you don’t have information, you can’t make decisions properly. This is often the reason people put off decisions, but they don’t always realize it. As a result, they sit on a decision for awhile. Instead, go and get the info you need so you can make the decision immediately. Better yet, have the information sent to you beforehand, so you have everything you need to make the decision when it’s time. Figure out what information is needed for your regular decisions and have it regularly on hand.

8. Keep “Action” at your forefront. Put up a sign on your desk that says “Action”. Make this your mentality throughout the day. When you are putting something off, remind yourself to take action. When you have a bunch of steps you have to do, remind yourself that eliminating steps leads to taking action sooner. When you’re in a regularly scheduled meeting (like, every day), ask yourself if this is preventing action.

9. Look for action-oriented people. When hiring or selecting a team, look for people who get things done. This can be seen in their track record. Give them a trial and see if they tend to focus on actions and decision, or processes and paperwork. Action-oriented people will get things done more effectively.

10. Reward action. Reward team members as well as yourself for action taken. Rewards could be as simple as praise or as big as a promotion or a bonus to the most action-oriented employees. These rewards tell your company or organization — or yourself — that action is a top priority.

“Action is eloquence.” - William Shakespeare

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Unconventional Guide to Working for Yourself

I recently received a copy of a great ebook that I think a lot of you will enjoy … it’s from Chris Guillebeau and it’s an amazing guide to becoming an entrepreneur and being your own boss. I’ve done this myself and highly recommend it to anyone who likes to be independent and is highly self-motivated.

Some of the chapters in the ebook include:

• Info on creating multiple income streams
• Ways to make money via blogging, selling information products, consulting, photography and more
• Affiliate and ad programs
• Creating a launch event
• And a whole lot of other stuff I don’t have room to list here

In addition to the ebook, the package includes three mp3 audio guides:

• Questions & Answers on Very Small Businesses
• 24 Actions You Can Take Today to Create Online Income
• 18 Tips to Get Traffic to Your Website or Offer

I recommend this package to anyone looking to work for themselves.Click here to view more details. (Affiliate link.)

9 rules of innovation from Google

1. Innovation, not instant perfection 
Trial launch with a beta. Perfection can evolve

 

2. Ideas come from everywhere 
"We let everyone comment on an idea. Comments lead to new ideas."

 

3. A license to pursue your dreams 
"We let engineers spend 20% of their time working on whatever they want, and we trust that

they'll build interesting things."

 

4. Morph projects, don't kill them 
Change projects which seem no market ready into ones that market needs

 

5. Share as much information as you can

Snippets - Every Monday, all the employees write an email that has five to seven bullet points

on what you did the previous week. Being a search company, we take all the emails and make a giant Web page and index them."

 

6. Users, users, users 
Users, not money
eyeballs translate to either subscription services or advt. revenue

 

7. Data is apolitical 
Decision should be based on data and not on closeness to a person.

 

8. Creativity loves constraints 
There is always a constraint and you need to think out of the box to get over it.

 

9. You're brilliant? We're hiring 
"...wanting to work on big problems that matter, wanting to do great things for the world,

believing that we can build a successful business without compromising our standards and

values."

 

"If I'm an entrepreneur and I want to start a Web site, I need a billing system. Oh, there's Google Checkout. I need a mapping function. Oh, there's Google Maps. Okay, I need to monetize. There's Google AdSense, right? I need a user name and password-authentication system. There's Google Accounts."

 

"This is just way easier than going out and trying to create all of that from scratch. That's how we're going to stay innovative. We're going to continue to attract entrepreneurs who say, 'I found an idea, and I can go to Google and have a demo in a month and be launched in six.'"

Google Checkout, Google Maps,  Google Adsense, Google Accounts

More vs. enough

	Aug 25, 2008 7:53 PM More vs. enough from Seth's Blog by Seth Godin Lesley reminds us of Herzberg's work on hygiene. It's not just theory, it's a vitally important marketing concept. It's easy to believe that joy lives on a simple curve. If you give me more of what I want, you give me more joy. If one baseball game is good, season tickets are better. If $300 an hour for consulting is good, $400 is better. Improved = more. It turns out, though, that there isn't just one curve, there are two. The second one is about hygiene. Not just being clean, of course, but being in an environment in which certain requirements are met. All the farm-fresh groceries in the world won't make you happy if your kitchen is filled with bugs. A high-paying job that delivers a screaming boss, no job security and a home life fraught with tension isn't a stable place for most people. Not because the money isn't there, but because basic "hygiene" needs aren't being met. We see this with computer hardware and software (crashing is a hygiene issue). We see it with thrift stores for food (freshness, or the appearance of it, is more important than money for many people). And we see it with every human resource issue. Next time you try to grow market share, while it may be tempting to lower price or offer more features, perhaps it's worth considering addressing unfixed hygiene issues instead.

More Priorities, Less Likelihood of Implementation

by Tim Berry

I wish I had data to prove it, but I will say that I've seen it over and over again for 30-some years: in business planning, three to five priorities work, and 10 or 20 priorities doesn't work. In fact, it's a classic inverse relationship: the more priorities, the less likelihood of implementation.

Even without data, there is the anecdotal value of how many business plans I've dealt with. The illustration here is a slide I've been using in presentations since the 1980s.

It's a classic inverse relationship. If one goes up, the other goes down. Like traffic and speed, clouds and sun, or teenagers in the household and money in the parents' pocket.

There's an obvious reason. Planning is about people and management, and people and management is about knowing when to say yes and when to say no. Priorities are sometimes about having to say no, we can't do that distracting other thing, we have to do this important first thing. That boils down to a matter of priorities.

Priorities are manageable when there are three, four, maybe five of them; but they are meaningless when there are 10 or 20. Who is going to believe the importance of not doing something just because it's not a priority when there are 20 priorities already? What's wrong with a 21st?

The opposite is focus. I've seen some real successes in business planning when the priorities made sense and the entire company was able to understand the priorities and focus down hard on them. Example? Apple Computer grew from an unmeasurable market share to 15% and from $180 million annual sales to $1.5 billion from 1991 to 1994 mainly by focusing on two key priorities: work with major Japanese companies as allies and develop the differentiation of the graphic operating system as a tool for using Kanji characters.

Thanks to Seth Godin for reminding me of this today with his post The Power Of Chunking. "There really is a rule of seven," he says, "when it comes to putting ideas into your head." I'm saying less than seven in this business planning context, but Seth is in a much broader context. And, at the end, he adds:

Seven is probably too many bullets. Three is more like it.

Three we can handle. Three is manageable and memorable and actionable. Give me three things and I can find a place for them in my brain. Each of those three things can probably have three subthings if you like. And then, at least for now, that's it.

Understanding Employees

3 Ways to Make Employees Miserable from Planning, Startups, Stories by Tim Berry I just listened to an HBR Ideacast interview with Patrick Lencioni, author of The Three Signs of a Miserable Job. Here's a quote: A friend of mine was a waitress in college ... she said her and her friends would come to work and complain all the time about the people who came into the restaurant because they stayed too late, or they made a mess ... and they always wanted to get out of there as fast as they could. Finally their manager sat down with them and said 'look at these people who come here. These are people who are celebrating birthdays and anniversaries, or who are coming in to meet an old friend, or who have a stressful life and they need to go someplace where they can actually relax and get a good meal. We are the conduits of that. Everyone who comes in here has a story. Our job is to help them make this the best experience possible.' He was sincere in that. After a while these waitresses starting coming to work with a different sense of purpose. During the breaks and after work they would talk about the different events they'd served, and the people who came into the restaurnat. He turned what looked like a crummy job into a vocation. All people deserve that. Notice the way his story puts it, that the waitresses deserved to have meaning in their job. It isn't about how their manager tricked them into working harder, it's about how he gave them relevance. Irrelevance, he goes on to say, is one of the three signs. People deserve to have their jobs matter. Good companies, and good managers, need to give them that level of satisfaction. Who does the administrative assistant help? Her boss. Yet her boss is probably reluctant to acknowledge the impact that he or she has on his or her life because they don't want to seem selfish, so they fail to really sit down and say do you realize how much better my personal and professional life is because of you? Do you know every thing you do for me makes me happier and less stressed? Every employee needs to know that there is somebody out there that they serve, and when we don't let people know that, we deprive them of a fulfilling job. This irrelevance is the second of the three signs. The first is anonymity: People cannot be fulfilled in their work if they are not known. All human beings need to be understood and appreciated for their unique qualities by someone who is in a position of authority. People who see themselves as invisible, generic or anonymous cannot love their jobs, no matter what they are doing. The third is a coined word, immeasurement. It reminds me of what I called metrics in a recent post on this blog. All human beings in any kind of a job need some way to assess their own performance that's objective. It might not be numerical or easily quantitative, but it's somewhat objective and observable by them, because then they are not left to depend upon the opinion or the whim of a manager once a year during a performance appraisal. People need to be able to go home from work every night, or every week, or every month, and know where they stand, and know what they can do to influence how they're working. this is why sales people are generally very satisfied in their job, because they have very clear evidence of their performance. Most people think they are coin operated, but in fact a quota is a wonderful scoreboard for them evaluating themselves, and all people need that. Sometimes it requires a manager to be very creative in how they come up with that. In my book this one guy works at the drive through window in a fast-food restaurant and the manager helps him realize that the best way he can measure the impact of his success is to find how many times he can make somebody smile or laugh that comes through his line. So he writes down or records for himself how often he can do that. We have to give people that sense that they have some measure of control.

Cash Flow Magic

Run Silent, Run Deep, Run Out of Money from Planning, Startups, Stories by Tim Berry I'm posting this today with a double purpose, I admit, because in about two hours I'm going to be giving a workshop at the annual Small Business Development Center convention in Denver, on the topic of "Teaching Cash Flow." The win here, I think and hope, is to distinguish between planning cash flow and teaching cash flow. Those are separate problems. The most important problem is getting people who haven't been running companies to believe that cash flow and profits are different. That's just so important because it doesn't add up. It isn't believable. I developed business planning software originally as templates for business planning clients to deal with the following amazingly typical exchange: Me: so if you grow faster, then you'll need to get more financing. They: no, that can't be true, because we're profitable. We make money with each sale, so the more we sell, the more we can fund ourselves. Me: bingo! Please sit down here for a few minutes and deal with these numbers. And so it would go. As soon as you're managing inventory or selling on credit -- which means about any sale to business -- then your cash flow is waiting on the wings, a silent killer, to foul you up. I learned this first in business school and then forgot about it. I learned it later again, the hard way, when Palo Alto Software sales tripled in 1995 and that nearly killed the company. Why? How? Well the huge sales increase was selling software product through traditional channels of distribution, meaning stores, and that means selling to distributors who then resell to stores, and that means that it can take five months between selling the product and being paid for the product. In the meantime, you've got to make payroll and pay your vendors. Yes, it's a good problem to have, we all want to increase our sales and profits, but it's a whole lot easier to deal with if you plan the cash implications well. Today in my presentation I'm going to use one of my favorite metaphors, the Willamette River as it runs through Eugene , Oregon, which is where I live. The river slows down coming out of the cascades and into Eugene, and it looks deep, slow, and peaceful; but it's much more dangerous there than when it's throwing up white water through the rapids. Why? Because it seems so calm and welcoming. People disrespect its currents, get caught in weeds, branches, or rocks, and ... well that's a good metaphor for the way cash flow hits small business when things are good, when sales are growing. What's particularly painful about the cash flow problems that come with growth is that, precisely because there is growth, these problems can be prevented by planning. We've had growth spurts since then that were far less painful because we understood the dangers of cash flow, planned for the cash implications of growth, and worked with our bank ahead of time to make sure the working capital was there.

Personality Types in work place

MGMT VISIONS - Personality Types - Sep 10, 2007

Tim Bryce (Management Consultant)

CLICK TO DOWNLOAD BROADCAST

				BLOG

In this week's "Management Visions" broadcast, my essay is entitled "PERSONALITY TYPES," which is an excerpt from my new book, "Morphing into the Real World" (ISBN: 978-0-9786182-5-4). Describes the four types of personalities commonly found in the work place.

My "Pet Peeve of the Week" is "Sisters" and we also have our "Letters to the Editor."

"Management Visions" is a weekly broadcast on subjects pertaining to Information Resource Management (IRM). It is available in the following file formats: RealMedia (RM) and Windows Media Audio (.WMA file), both for "streaming" audio, and MP3 for Podcasts and for other audio devices. The broadcast is updated on Sundays. You'll find our broadcast listed in several Podcast and Internet Search engines, as well as Apples' iTunes.

You can find "Management Visions" at:

http://www.phmainstreet.com/mba/mv.htm

Please feel free to bookmark this address or put it in your "favorites" folder.

BLOG: To review the transcript of our show and post comments, see our "Management Visions" blog at:

http://managementvisions.blogspot.com/

I hope you will "tune in."

For a complete listing of our "PRIDE" Special Subject Bulletins, please see:

http://www.phmainstreet.com/mba/mbass.htm

If you have any questions, please do not hesitate to contact me.

Regards,
Tim Bryce
Managing Director
M. Bryce & Associates (MBA)
a division of M&JB Investment Company
Palm Harbor, FL, USA
E-Mail: timb001@phmainstreet.com
Yahoo! IM: littleleaguerng
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Since 1971: "Software for the finest computer - the Mind"